TECH NEWS – In preparation for its legal battle with the FTC, Microsoft has made a shocking statement regarding the outcome of its “console war” with PlayStation…

 

 

Microsoft has officially declared that the “great console war” for Xbox is “lost”. So much so that Sony and Nintendo have everything they need to dominate the games market for years to come. The comments suggesting defeat were part of a legal argument. It was filed ahead of the company’s recent trial before state regulators. This has been going on since the FTC sued Microsoft over its acquisition of Activision Blizzard in December.

Microsoft’s $69 billion takeover bid for Activision Blizzard – which also owns Candy Crush maker King – would be by far the largest acquisition in the history of the games industry, surpassing Take-Two’s 2022 purchase of Zynga by some $57 billion.

Sony and several regulators have argued that Activision’s acquisition of Blizzard would give Xbox too much power. Microsoft has since repeated that the move would only level the playing field since it first proposed the deal in January 2022.

Expanding on that position, the company’s lawyers now argue that Xbox has lost the “console war”. It cannot hope to compete with Sony and Nintendo without an aggressive acquisition strategy. In a partially redacted filing in preparation for Microsoft’s FTC lawsuit, the tech giant revealed that Xbox could account for just 16% of console sales and just over a fifth of global console shipments by 2021. The filing said the company has also “consistently” been the least successful console maker in terms of sales for most of the past 22 years.

Xbox is even struggling in its home market. Microsoft lawyers say Sony’s US player base is currently larger than its own. The exact magnitude of that gap was omitted from the court documents that have now emerged. However, the general gist remains clear. Microsoft continues to insist that deals such as Activision’s acquisition of Blizzard are the only way it can compete with its Japanese rival.

Speaking of which, the submission explicitly mentions Sony and Nintendo’s ability to exploit exclusive content as one of how the Japanese companies can continue to dominate the global games market without limit.

Microsoft has already made a similar point across the Atlantic at the end of 2022. It told British regulators then that PlayStation had better exclusive content than Xbox.

Whether this pessimistic legal reasoning will help the conglomerate win its lawsuit with the FTC remains to be seen. But even if it does not, the FTC itself has no power to block Activision’s acquisition of Blizzard outright. As things stand, the UK’s rejection of the proposed takeover, which Microsoft is currently appealing, appears to be a more credible threat to the deal.

Source: Twitter

Microsoft says Xbox has "lost the console wars." Ahead of the FTC case today, Microsoft is keen to show Xbox is in third place. Microsoft reveals Xbox had 16 percent share of console sales in 2021 and 21 percent of the console install base https://t.co/4PrN7uQwvS pic.twitter.com/KKyQcTXZqp

— Tom Warren (@tomwarren) June 22, 2023